Left vs Right Perception Bias: Idealists vs The Economy?

Vote centre left (e.g. Democrats in the US) to increase support for ‘idealist’, issues, such as climate change, or vote centre right (e.g. Republicans in the US) for a better economy. I (and others) suggest this is conventional thinking and there is a perception that the economy will be better under the centre right, but is it correct? Or is there perception bias that lead us to believe this regardless of the data?

• History:
  • USA – Democrats actually better for the Economy.
  • UK – Labour actually better Economically than Tories
  • Canada – Conservatives behind Again
  • Australia – Basically Equal
  • New Zealand: Labour vs Nationals
• Analysis:
  • When Left & Right Clash
    • Idealism vs The Economy
      • Example: Covid-19 and New Zealand
      • Pollution, Environment?
  • When Left & Right Agree
    • Idealism in harmony with the economy
      • Example: Caring for the disabled
    • Immigration: A Strange Alliance
  • Distortions?
• Conclusion:
  • The idealist path is just as often the economic path

History.

Economics USA – Democrats vs GOP

Historically, the Democrats have marginally outperformed the Republicans in terms of the economy.

I first encountered this on program ‘Planet America’, during a program analysing the 2020 US Election results. Their analysis goes slightly deeper than measuring outcomes under each party, and also reveals that results are best when the same party does not control the all levels of government.

I then tried searching ‘economy democrats republicans’ for confirmation, and the link at the top of this section is the first I found.

I also found others with the same viewpoint, even when I deliberately tried to bias the search to find articles that would suggest the Republicans are better managers, I could not find any. In fact, it does seem to be accepted as fact by those who research the topic, but as not widely known by the general population.

UK – Labour better Economically than Tories

So then I checked other countries, starting with the UK. The same common perception of the right of centre party, in the UK the ‘Tories”, is the better economic manager, and the same actual case of no evidence to support that perception. Again, it is financial publications that provide what should be objective analysis that again: the economy fares at least as well under the centre left party, and by some measures far better. This is despite the normal readers of economic publications typically voting to the right of centre.

Canada: Conservatives again behind.

Canada main parties of Canada are, from right to left, the Conservative party and the Liberal Party. There have been fluctuations. There was one election where the NDP was the most prominent party ahead of the Liberals, and the Conservatives merged from two conservative parties in 2003, but one of those two parties, the Progressive Conservative party, has the heritage of the only party other than the Liberals to hold office prior to the merger, and the new merged party can be seen in many ways as the successor.

So which of the two, the Liberals (left-centre) or the Conservatives (Right Centre) have the best track record? It seems from what I have found so far, again the centre left party has the best record, and the centre right party the best perception by the electorate.

Australia – Basically Equal?

Like Canada, one of the two main political parties in Australia is the ‘Liberal’ party, however in Australia, confusingly, this is the centre right party and the centre left party is the ‘Labor’ party. At the national level, the Liberal party normally forms government in coalition with another centre right party, so a centre-right government in Australia is alternatively called a ‘Liberal’ government or a ‘Coalition’ government.

Yet again, the reputation as the party focused on the economy is the centre right party, but there is yet again, no evidence to support that belief. Again there are a number of articles, as linked from here, that support the position that contrary to public perception, the party with the best record is the centre left party. However, this time I also found a counter point, in the form of an actual thesis with key topic of ‘is there any difference in the performance of the macroeconomy under Liberal, and under Labor governments in Australia‘. As summarised in this article, once adjusted for the variance in global economic conditions, the answer is ‘no real difference‘.

New Zealand: Labor vs Nationals.

In New Zealand the centre right is the National party, and the centre left is again the Labour party (this time with the letter ‘u’) . Yet again, there is a common, yet false, belief that the centre-right party has the best economic record, and actual history of the centre-left party having an the very least equal economic record.

Analysis

When the ‘Left and Right’ clash

The Economy vs Idealism.

Both left and right often have similar goals, the difference then comes down to which comes first, the economy of the goals. The ‘centre-right’ is more reluctant to interfere with the economy, allowing ‘free market’ and then fixing problems should they arise, while the centre-left has tendency to expect their may be problems if the market is just ‘free’ and react in advance. Sometimes the first way is best, sometimes the second.

Example: Covid-19 and New Zealand

With Covid-19 governments responses mostly fall somewhere on a spectrum:

1. downplay the health problem and focus on the economy
2. the coronavirus is both a health and economic problem
3. covid-19 is a serious health problem the must have priority

‘Conservative’, or centre right governments, tended to choose a response between number 1 and 2. The ‘furthest left approach’ of a pure response ‘3: the health problem must have priority‘, was only chosen by governments such as the centre-left government of New Zealand.

The Prime Minister (Scott Morrison) of the centre-right national government of Australia declared

‘eliminating’ COVID-19 would come at too high a cost

the conversation April 7

Yes, as indicated by that same article indicated:

New Zealand is trying for elimination, but has had to go into a stringent lockdown to pursue it. Elimination was the policy adopted in the source of the virus – Wuhan in China.

the conversation April 7

The centre-left government of New Zealand succeeded in elimination and demonstrated that the more ‘left’ policy of elimination also had the best economic outcome. Once the virus was eliminated in New Zealand, life went basically back to almost normal (although the virus did briefly re-enter, bypassing quarantine at one point). This resulted in the rare situation:

Neale is right.  There is this constant rule throughout English speaking western democracies.  The electorate always believes that tories are better with the economy.  Apparently being a cheerleader for capitalism is better than being a critical manager but this is as solid a political rule as Judith Collins will engage in dirty politics.

Quote from article on thestandard.org.nz (my bolding)

New Zealanders switched from the normal pattern of believing the ‘centre-right’ (National) party better manage the economy, to believing ‘centre-left’ party would better manage the economy.

This shows that ‘perception bias’ can be overcome. People can shift to belief that putting the ‘idealist’ agenda first can, at least sometimes, be the best for the economy.

Covid-19 has provided one of the best examples ever of how a simplistic choice to ‘put the economy first’ approach, can actually deliver the worst economic outcomes. (Note that Australia, where health is a state matter, and every state has a government somewhere to the left of the national government, also ended up basically eliminating Covid-19. Most states of Australia have an almost ‘post-covid’ situation, as does New Zealand).

Looking around the world, while there are other factors, there is some correlation between the further to the right the government, the worse the pandemic, and the worse the damage to the economy of the county. Of the countries listed above, the UK and the US, with their conservative governments, have had some the worst outcomes from Covid-19 globally.

Pollution, Environment, Others?

Logically, if there is one area where idealist goals can also economically rewarding, there may also be others. For example, is it really true that any consideration of environmental consequences must necessarily be damaging to the economy? Or can create expensive health problems, and in the longer term, industry sustainability and land availability problems be more damaging to the economy. In other words, while idealist paths do normally come with some cost, the ‘non-idealist’ path can have a greater cost, as has been seen with Covid-19.

When Left & Right Agree

Idealism in harmony with the economy.

Some ideals just cost money. There are even times when ‘doing the right thing’ can be so expensive that it is only feasible for the very rich. Consider the Gates Foundation.

But centre-left or centre right, a society tends to remain relatively consistent in term of social welfare. One side may be more likely to introduce a policy, but once in place, implementations differ little as governments change.

Spending money generates a bigger economy. When ideals just add to the economy, rather than placing restrictions on the economy, both sides can adopt the same solution.

Example: Caring for the disabled.

Both Centre-Right and Centre-Left governments provide for the disabled. The left tends to champion the idea everyone is equal. The right tends to champion everyone can be rich if the work hard enough. Both sides normally agree that disadvantages of the disabled are not their fault.

Both are ‘centrist’ governments after all, and both sides of the centre are comfortable with allocating economic resources to achieve agreed ‘idealist’ social goals. The centre left may be less comfortable with social programs to assist those the right believes should assist themselves, but the concept of spending to achieve idealist goals is well understood, and mostly agreed.

The difference between positions is as much a different set of goals, but a difference in perceived best path to achieve those goals.

Both centre-left and centre-right usually agree on the nature (if not the desirable extent) of ‘caring’ programs that do not disrupt economic systems. It is in allowing idealist ‘caring’ goals to impact economic systems, where paths diverge:

• centre-right: allow undisturbed creation of wealth
  • then allocate some of that wealth to fix any problems
• centre-left: adjust creation of wealth to reduce problems

In areas such as caring for the disabled that are removed from economic systems, there is little difference in approach. With problems such as the environment or Covid-19, the differences become clear.

There seems almost universal belief by the public, that the centre-right approach will produce better economic outcomes, despite a lack of evidence for that belief.

Immigration: The Strange Alliance.

Practically every country in the world, including those discussed in history above, has passed the point where additional people increase accessible natural resources. This means for each of these countries, every increase in population can comes with the risk of reducing living standards of the average person. Despite this challenge:

• the ‘right’ still wants to increase the population, because this enabled more wealth for the wealthy
• the ‘left’ still wants to allow immigration, because it feel wrong to exclude people on the basis of their country of birth

In the end, sometimes left and right can each support the same path for very different reasons.

Distortions?

Note that in the data quoted for ‘history’, in most cases there was no attempt to adjust economic performance to compensate for global circumstances. In theory, the longer time periods being compared, the less important this will be provided there is no systems reason for a difference.

It is generally agreed that, regardless of actual data, voters tend to believe the centre-right parties will better manage the economy. What if voters will elect centre-right parties more often in difficult economic times?

Alternatively, the very perception of good management by the centre-right could inspire business investment, and assist economic performance.

I have no analysis that supports such distortions occuring, but it is possible that both sides do not experience identical conditions.

Conclusion.

Between centre-left and centre-right overall there id clearly no evidence of systemically better outcomes for centre-right parties, despite widely held belief in economic credentials of the centre-right being one of their key election platforms.

Actual outcomes are sufficiently close to suggest it matters little who is in government. As an example, look at variance of growth from the US data above. Do we really think that degree of variance is due to differences between those governments, or it more likely most differences are all about factors the government does not control.

Conclusion: Economic performance is more about the overall environment than the government itself.